Former Cum-Ex-Supervisory Officer demands better combating of financial crime
Financial criminality is still too often seen as a gentleman's offense in Germany, said Brorhilker. This involves billions of euros that we all lack and that we need to recover. An example of this is the so-called Cum-Cum transactions. These transactions caused an estimated damage of approximately 28.5 billion euros in Germany by 2021 - nearly three times more than in Cum-Ex.
In practice, this works as follows: German companies or people can claim back the capital gains tax. However, tax foreigners, such as state funds or foreign insurers, cannot. In Cum-Cum transactions, German stocks held abroad are transferred to German banks for the dividend payout. After the distribution, the stocks return to their original owner. The tax refund is then divided among the parties involved.
"It has been clear since 2015 that these transactions were not in order legally," said Brorhilker. The inaction of the authorities harms the trust in the rule of law. One reason for the partial lack of criminal prosecution is also the influence of the financial lobby. "This is a large, very well-connected industry that has a great interest in preventing effective controls and prosecution, and it manages to do so," said the new Finanzwende business manager.
Brorhilker also refers to several letters from the Federal Ministry of Finance from the years 2016 and 2017, "on the basis of which the illegal profits from Cum-Cum transactions were mostly left to the banks," as Finanzwende explains. This step was only corrected in 2021 by the then Finance Minister Olaf Scholz (SPD). It is still unclear how these letters came about.
Finanzwende managing director Gerhard Schick also criticized the current government. "The standards have become completely distorted," he said. While social fraud, for example, in social benefits, is widely discussed, Finance Minister Christian Lindner (FDP) remains silent on "illegal profits" in the billions. This is also important in the context of budget discussions.
Moreover, those suspected of financial criminality are "routinely financially excellently equipped," as Brorhilker wrote in an early July newsletter. Often, investigations against money transfers are discontinued, and the damage caused is then often greater than the amount required to discontinue the investigation.
By the end of 2022, according to Finanzwende, 237 million euros had been legally recovered from Cum-Cum transactions. Cases with a volume of six billion euros are currently being examined by the authorities.
Brorhilker has been active as a business manager at Finanzwende since June. Previously, she investigated as a public prosecutor in the Cum-Ex scandal, in which more than 1,700 suspects are being investigated. She resigned from public service at the end of May. Cum-Ex and Cum-Cum transactions are closely interconnected, said Brorhilker.
In the case of Cum-Ex, the state refunded a capital gains tax that had been paid only once. This practice was common in many banks, both domestically and abroad, since the early 2000s. The Federal Constitutional Court only confirmed the criminality of such transactions in 2021.
The former Cum-Ex Financial-Advisor, operating in Berlin, was among the numerous suspects investigated in the Cum-Ex scandal. Despite financial criminality being widely prevalent, the recovery of the estimated 28.5 billion euros lost due to these transactions in Germany has been slow. The influence of the financial lobby in Germany has been cited as one of the reasons for the lack of effective prosecution in such cases.
